151–160 of 297 posts
Earlier quoted context omitted.
Why do you want a gentle inbuilt mechanism to encourage consumption?
Because if you made a better return by hoarding cash then by investing -- holding bonds, buying apartment buildings-- investment would stop and people would stuff cash into mattresses.
It seems that this guy decided to go heavily into Bitcoin because of a mistaken belief that seems all too common: "At the time, I saw a market dislocation and the likelihood of significant dollar inflation due to the US Government’s likely response to the unfolding pandemic." He thought that government responses to severe crises that inject lots of money into the economy will cause "significant dollar inflation". In…
Hi, I'm the author. > Money isn't created primarily because governments print it; whenever a bank creates a loan money is created, and when they call in loans money disappears. Yes this is right, and I am in fact aware of this mechanism. As I say in the post: "[...] anticipated high levels of lending and consumer spending post-pandemic, seemed likely to fuel substantial USD inflation in real terms through the end of…
The author implies that the recent growth in tether's market cap is an indication of an incoming exit scam. A cursory glance at Coinbase's USDC's market cap [1] shows that it too is growing at almost exactly the same pace as tether's [2]. I think most players in this market would agree that Coinbase, for all of it's failings, is unlikely to be planning an exit scam at this point. It doesn't disprove the whole thesis,…
No, it doesn’t. In fact it’s exactly what you’d expect if Tether is fraudulent. Stablecoins are a great way to transact in dollars that you otherwise wouldn’t be able to, for instance the proceeds of illegal activity. The author notes the exact mechanism: print USDT, buy BTC on sham exchanges, send BTC to Coinbase, sell for USDC. You would expect them to increase in lock step if this is happening. If it were legitima…
The steps you described don't result in new USDC being minted. That happens only when people send dollars to Coinbase and change them to USDC.
> If it were legitimate flows, you would actually expect USDC to far outpace USDT given the much greater ease of conversion and trust in the sponsors.
No, USDT has been around for a lot longer and lots of very liquid trading pairs are based on it. So if you need to buy lots of crypto currency you might need tethers so you can buy on an exchange with a liquid trading pair (BTC/USDT on Binance being the most liquid trading pair).
> For the rest of 2020, my inflationary thesis looked right Just to make it clear: there's absolutely no broad inflation almost everywhere in the world, certainly not in the United States. It may still come, but inflation is not why Bitcoin is on such a tear. Look at CPI or PPI of you don't believe me. Although this does remind me of the Green Lumber Trader story from Taleb. Congrats on the trade!
I am afraid of Bitcoin because of Tether. However, there is one part of this argument that I don't quite understand: If we woke up tomorrow to find out that Tether caused a disruptive event overnight and BTC/USD fell from $30,000 to $10,000 or $3,000..... Wouldn't there be a gigantic line of people who have been experiencing FOMO for the last 6 months ready to jump in at the new attractive price level, driving the pr…
It seems that this guy decided to go heavily into Bitcoin because of a mistaken belief that seems all too common: "At the time, I saw a market dislocation and the likelihood of significant dollar inflation due to the US Government’s likely response to the unfolding pandemic." He thought that government responses to severe crises that inject lots of money into the economy will cause "significant dollar inflation". In…
CPI is a very distorted view of actual living costs over time. House prices aren't included and we've seen prices balloon over the last decade. Sure, your apples cost the same but good luck trying to buy property . Yes we have the usual supply constraints, etc.
I am afraid of Bitcoin because of Tether. However, there is one part of this argument that I don't quite understand: If we woke up tomorrow to find out that Tether caused a disruptive event overnight and BTC/USD fell from $30,000 to $10,000 or $3,000..... Wouldn't there be a gigantic line of people who have been experiencing FOMO for the last 6 months ready to jump in at the new attractive price level, driving the pr…
If tether crashed I would expect bitcoins price to go up not down. It would suck for people holding tether because nobody would want their tether.
Bitcoin’s price in what reference currency? USDT? Clearly.
USDC? Actual USD (probably measured indirectly via intermediary currencies)? Something else? For anything but USDT, the reason for such an expectation could use some explanation.
Earlier quoted context omitted.
Author here. I really appreciate your kind words about the post - thank you! I'm also broadly in agreement with your conclusions as to what this means for a crypto trader or holder. I've zeroed my net exposure to this ecosystem myself, both in anticipation for such an event, and out of recognition that I frankly understand it far less well than I originally thought.
I am not a Bitcoin holder, but Ethereum. I zeroed all my Ethereum except the ones locked due to staking (32 ETH, but I bought them when they were $600) because of these Tether news lately. I will wait for more clarity before jumping back in. It is kinda sad that in this technology there are so many frauds like that.
Probably wise given how correlated ETH and BTC prices are.
>It is kinda sad that in this technology there are so many frauds like that.
It is, but it is also unavoidable.
As the author correctly points at towards the end, many of the properties of cryptos (high liquidity, non-reversible, pseudo-anonymous), while very useful to legitimate users, are a wet dream for crooks.
As a matter of fact, Bitcoin has been used to scam people for its entire existence, e.g.[1][2], sometimes even in new and innovative ways.
There is one aspect of Bitcoin that many people entirely overlook, especially newcomers: [3]
[1] https://en.bitcoin.it/wiki/Trendon_Shavers
[3] http://trilema.com/2013/the-story-of-pointless-and-witless/